Speaking in a 26-minute interview with Bloomberg Television in New York on Monday, Aliko Dangote asserted that the time is right to end fuel subsidy that have cost Nigeria trillions of naira. He emphasized that removing these subsidies would help determine the country’s actual fuel consumption.
This call for subsidy removal comes in light of the recent commencement of petrol lifting from the Dangote Refinery, alongside rising prices, which have reached ₦950 per litre in Lagos and above ₦1000 in northern states.
Dangote noted that the refinery’s production is expected to ease pressures on the naira and confirmed his ownership of two oil blocks in the upstream sector, with production anticipated to start next month.
He stated, “Subsidy is a very sensitive issue. Once you are subsidising something then people will bloat the price and then the government will end up paying what they are not supposed to be paying. It is the right time to get rid of subsidies.”
He elaborated on the refinery’s role in stabilizing consumption data, saying, “But this refinery will resolve a lot of issues out there, you know, it will show the real consumption of Nigeria, because, you know, nobody can tell you. Some people say 60 million litres of gasoline per day. Some say, it’s less. But right now, if you look at it by us producing, everything can be counted.”
Dangote also plans to implement tracking for trucks and ships loading fuel from the refinery to ensure that oil remains within Nigeria. “We are going to put a tracker on them to be sure they are going to take the oil within Nigeria, and that, I think, can help the government save quite a lot of money. I think it is the right time, you know, to remove the subsidy,” he added.
When questioned about the impact of the federal government retaining the fuel subsidy on his refinery, he responded, “Well, you see, we have a choice of either one. We produce, we export, and when we produce, we sell locally. But we are a big private company. And yes, it’s true, we have to make a profit. We build something worth $20bn so definitely we have to make money.”
He noted that the removal of subsidies is a government decision, stating, “The removal of subsidies is totally dependent on the government, not on us. We cannot change the price, but I think the government will have to give up something for something. So I think at the end of the day, this subsidy will have to go.”
Dangote highlighted the economic implications of petroleum products, mentioning, “Petroleum products consume about 40 percent of our foreign exchange,” and emphasized that fuel from his refinery, which began supplying gasoline on September 15 to the state-owned oil company for domestic sale, “can actually stabilize the naira.”
He also addressed a recent pricing disagreement with the Nigerian National Petroleum Company Limited (NNPCL). “There wasn’t really a disagreement, per se. NNPC bought from us on the 15th of September at the international price, which they also bought, about 800,000 metric tons of gasoline imported. So the one that they bought from us actually is cheaper than the one they are importing.”
He clarified the situation, saying, “And so when they announced our price, the guy, I don’t know whether he was authorized. It wasn’t really the real price. What they have announced is most likely that is what it cost them, including profit and other expenses.”
On the future of crude oil sales, Dangote stated that discussions are ongoing, with a detailed agreement expected to be finalized this week. “We will sell the crude in naira after we have bought in naira. So now we are currently working out with the committee that the exchange rate is going to be priced.”
He continued, “And then we will also sell in the domestic market. What that will do is that it’s going to remove 40 per cent pressure on the naira. So because, see, the petroleum products consume about 40 per cent of foreign exchange.”
Dangote concluded by stating, “The deal is to give the government something that they want. It’s also a win-win situation for all and it would benefit the country. Currently, discussions are still ongoing to determine the details of the agreement. They are working out something that I think would be a win-win between us and the NNPCL.”
He added, “The agreement is very robust. Well, first of all, we would have energy security where they will give us crude. For example, in October, they’re going to give us 12 million barrels, which is on average, about 390,000 barrels a day, which will sell both gasoline, diesel, and aviation fuel.”
